PERSPECTIVES

Q&A with Jerry Storch on What Matters for Retail Industry Success

When Jerry Storch, CEO of Storch Advisors, shops, he wants all-channel options and good value, not entertainment.

How did you get involved in the retail industry?

I worked in consulting for more than a decade early in my career, advising clients in industries including financial services, consumer goods and retail. Of these, retail was always my first love because I found it fascinating to work with brands that my family and friends knew.

I ultimately made the transition from consulting to the industry. I wanted to get closer to the action—to be in a position to make decisions, not recommendations. I got an opportunity with Target, which was then Dayton Hudson.

Thinking back on it, I remember that I actually took a pay cut to make the change, but I was so happy to have the chance to immerse myself in something I was so passionate about.

What retailers have you been impressed with and why?

I’m pleased to say that I am impressed by a lot of retailers that are doing a consistently great job.

I admire Costco for many reasons. The company is decades old, but it always comes across as fresh. Members are loyal, the company offers great value every day, merchandising is strong, and there are always products to get excited about.

Too many retailers make the mistake that it’s all about entertaining customers in the stores these days. It’s the products that draw people in, not the “elephant bouncing on the ball.”

If you hadn’t pursued a career in retail, what industry or business would you have followed?

My inside-the-box answer would have to be financial services, as I was very involved with this industry during my time in consulting.

On the other hand, my outside-the-box answer is that I have always dreamed of becoming a science fiction writer. Who knows, maybe someday I will. I just haven’t had the time to give it the necessary focus and attention to make true progress.

My favorite sci-fi author is Isaac Asimov. You’ll find that so many of the fundamental themes in contemporary science fiction come from writers like him who were writing several decades ago.

What has changed for the better—and for the worse—in the retail industry over the last 10 years?

All-channel retailing makes retailing both frightening and cutting edge. Retail is no longer a sleepy industry. It is on the forefront of emerging technologies, which are changing at rapid pace.

Retail is more quantitative and analytics driven than it ever was—it’s gone from basic math to advanced calculus. These dramatic shifts are due to the evolution of all-channel and the advent of CRM analysis that offers total views of customers across channels and over time.

To succeed in the all-channel world, traditional retailers need to have the bricks and mortar infrastructure, the online presence and the social retailing know-how. They must do all of this while still providing excellent service. Some are doing this amazingly well, while others are struggling.

Accenture’s recent retail research revealed a trend of people going back to stores. Do you agree? If so, why do you think this is happening?

I actually don’t think people ever left the store. They just started shopping in the store less often and for more targeted shopping missions.

Some people like to say that they never leave home and always shop online in their pajamas, which they think is a death knell for physical stores. I don’t think this is true at all. People are social, and they like to go to stores. What’s more, the store is the center of the all-channel model.

Stores are superior to virtual experiences in many ways. For example, they allow for hands-on information exchange and education. Customers can look at, touch and try products.

Creative display and merchandising that attract and engage customers are the best in-store entertainment. These are the areas where retailers should make their in-store investments, not in flashy in-store “entertainment” experiences.

Moving forward, I think Internet-only retailers will be at a disadvantage to all-channel retailers because of this key role for the store.

What was your biggest accomplishment and biggest challenge as a retail leader?

I love the creative and innovative side of the retail business, and this is where I see my biggest accomplishments.

At Target, I led the development and growth of target.com, founded the Target grocery business and oversaw the Target Financial Services credit card business. I love being first and different.

The challenge with the drive to innovate is that you have to fund it. Traditional retailers are measured on bottom line performance—as opposed to Internet retailers that are measured on growth. So the fundamental challenge is innovating while growing earnings, and this is so difficult to do at the same time.

What perspective can you offer today’s retailers on the industry that might surprise them?

Global expansion is a top-of-mind issue for many retailers. The surprise is that in retail, unlike other industries, there are not global economies of scale. The cultural differences are so important, and retailers need strong local teams to succeed.

To be a great global retailer, companies must decentralize around these local teams instead of centralizing. What’s fascinating about this model is that each country becomes a unique learning lab, and successes can be shared across countries as long as cultural differences are considered and addressed.

What kind of shopper are you? Do you enjoy it? Considering your day job, are you a difficult customer to please?

I’ve always loved shopping. I think the store is the fulfillment of the capitalist ethos. People work hard to get money, and stores are the places they go to spend it.

When I shop, I enjoy being an observer. I can spend a couple of hours in stores looking at products, which is the exact opposite of how my wife likes to shop. I’m not demanding as a shopper, but I am particularly observant. There is always something to learn. That’s why retail genius Sam Walton spent so much time in the stores.

What’s fascinating about retail—and different than almost any industry I can think of—is that you can visit your competition.

If you could go back in time and give your 30-year old self some business advice, what would it be?

To enjoy the ride. I think so many of us work so hard to achieve our goals. And in doing so, we often worry too much. Life is too short, so it’s so important to enjoy it along the way.

How do you like to spend your free time?

I travel so much for work that when I have free time, I enjoy staying home and simply relaxing, enjoying time with my wife and our cats. It’s wonderful to have the opportunity to relax and enjoy a cup of coffee or a good book—preferably sci-fi.

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